The GameStop drama and what does it mean for Bitcoin

[stompix]

The manipulation happened the months before, when hedge funds artificially suppressed the price of $GME by short after short. This is just a way to call them out on it while abiding to the rules they set.

Maybe the reason for the first "manipulation" was the fact that the company was going out of business (and it will still do) with 1000 stores closed in the last years, 300 of them last year. So I don't see what the manipulation was shorting a company that is on its last legs. If that was unethical one might have to stop all short and long options, oh wait, far better, let s stop trading altogether so nobody can get rich and manipulate anything.

The revolution has succeeded, the evil banksters have been ruined and now the good guys are left with expensive stocks that will go back to zero unless they dump it on...hmm, some...evil goblins.... but that's a good thing, right? Completly ethical!
Let's cheer and grab some forks and hang everyone who dares to short bitcoin!

[HeRetiK]

Maybe the reason for the first "manipulation" was the fact that the company was going out of business (and it will still do) with 1000 stores closed in the last years, 300 of them last year. So I don't see what the manipulation was shorting a company that is on its last legs. If that was unethical one might have to stop all short and long options, oh wait, far better, let s stop trading altogether so nobody can get rich and manipulate anything.

The revolution has succeeded, the evil banksters have been ruined and now the good guys are left with expensive stocks that will go back to zero unless they dump it on...hmm, some...evil goblins.... but that's a good thing, right? Completly ethical!
Let's cheer and grab some forks and hang everyone who dares to short bitcoin!

Don't get me wrong, there's nothing wrong with shorts. They are an important tool for keeping the market in balance.

But.

Shorting 138% of a stock in existence? That's fucked. Selling subprime loans while at the same time shorting them level fucked.

Imagine whales shorting 28.98 million bitcoin on margin. Wouldn't that tempt you to squeeze them by the balls a little? Full knowing that they'll have to cover by trying to buy up more coins than ever have existed?

They fully knew the risk, they just didn't expect the plebs to notice the vulnerable position that they put themselves in.

[hatshepsut93]

Well, seems like it's already spilled over into crypto, the WSB people, directly or indirectly, have pumped DOGE.

Remember: What's going on is not some pump and dump scheme. It's not a matter of trying to find the greater fool. They're already there. It's the hedge fonds that overshorted the stock. They will be the ones holding the bag in the end. That's the endgame.

What about all the retail investors who were buying since the rally started? No matter what's your view on hedge funds and WSB, it should be completely clear that the stock is overvalued by insane margin, and it will be not only the hedge funds to suffer losses when the dust will settle. And what's worse, these losses will be a pocket change to institutional investors, but some of the retailers are gambling with their savings.

Though I do sympatize with WSB over the fact that these hedge funds are begging regulators to intervene.

[tyz]

What do you think?

It perfectly shows what happens when too much money is printed. It has to be said that these actions are mainly carried out by millenials on platforms like RobinHood who have little and no idea about the stock market. One can have sympathy for a group of small individual investors forcing large hedge funds into a short squeeze, the only problem is that this can quickly jump over to the general market. Because when hedge funds have to cover their short positions, they usually do so with value stocks that they then have to sell on a large scale. This is exactly what was hinted at yesterday when Apple and Tesla fell, although the published business numbers were excellent.

[HeRetiK]

What about all the retail investors who were buying since the rally started? No matter what's your view on hedge funds and WSB, it should be completely clear that the stock is overvalued by insane margin, and it will be not only the hedge funds to suffer losses when the dust will settle. And what's worse, these losses will be a pocket change to institutional investors, but some of the retailers are gambling with their savings.

I think at this point every retailer joining in is fully aware of the insane play they are making. Who else would?

Looking through r/wallstreetbets and related communities there seem to be mostly two kind of $GME investors right now: 1) WSB veterans with a lot of skin in the game, but compared to their usual trades the current situation is nothing, 2) WSB lurkers throwing a bit of play money in to be part of history, spite wallstreet and maybe make a little cash along the way.

I wouldn't go on r/wallstreetbets for financial advice, but honestly, I' prefer it over the Altcoin boards any time.

As for the pocket change:

For months, retail investors posting on a Reddit forum were broadcasting their intentions to take down a prominent, but reclusive, hedge fund called Melvin Capital — and doing so by buying call options on video game retailer GameStop, a stock in which Melvin had disclosed a big short bet.

But the effort appears to have failed, thanks to a $2.75 billion investment by Citadel and Point72 Asset Management, according to a statement from all three firms. 

That’s not going to fill the entire hole. As of Friday, Melvin was down 30 percent this year, which comes to $3.75 billion of the $12.5 billion with which it started 2021, according to calculations using numbers reported in the Wall Street Journal, which first revealed that the hedge fund was getting the bailout.

Looking at the big picture those USD 3.75 billion may still be pocket change, but it's much more than any market manipulating bank has ever been fined in the last few years. (and I don't mean this as a blanket statement that all banks are market manipulators, but literally banks that have been caught manipulating the market)

That was last week when the price was much lower. Who knows how much they've lost in the meantime.


On a sidenote, $GME is crashing right now. Looking at how Robinhood is disabling buy orders and how even some of the European market places appear to become unavailable for trading every now and then, this looks like an orchestrated attack, which are words that I don't use lightly. Let's just say it's highly irregular that $GME trading has become almost impossible despite market movements and volumes not having changed much in the last 24 hours. This is not Kraken's trading engine shitting its pants because of a big green Bitcoin dildo, this is stock markets on a regular Thursday.

[avikz]

That GameStop stock drama showed that you dont have to be a whale to influence the price. The situation simply proved one more time, that the crowd with similar ideas, aims and a leader (or strategy) can achieve a lot.
As to Bitcoin, we have a lot of users, enough funds and unified goal, we only need little till mass adoption.

That's true but it is not really good for any market at all! A market which can be manipulated at will, is very dangerous for an average Joe! It is only profitable for those people are part of the strategy (or should I say conspiracy), but super dangerous for the rest.

In stock market, at least there is a method to halt trading but when it comes to crypto market, it can be compared with wild west only! In a general sense, price increase is good for HODLers, but a trader usually rides the wave and pumping may ruin his trading plans!

[mu_enrico]

There will be a dump but if it happens after tomorrow that would only means hedge funds will be bagholders. They have to close their short positions before tomorrow.

As I posted above: The end game is short squeezing the hedge funds overshorting the stock. The victim won't be small investors, but rather institutional ones that have made their fortunes fucking over the little guy over the last few decades.

I like the story of a group of individual investors who can take down Melvin, but it seems pretty unlikely. Big HF companies can borrow much more money if they need it, with the risk of only bankruptcy.

The end game is pretty much predictable, trading suspension, and traders forced to close their position.

Timcast rant > https://www.youtube.com/watch?v=vtYRmSPKNqY

[Broly46]

I’m totally speechless monitoring the price move on gme the entire day, it goes from 480 premarket to 340 on market open, and down to 113 during the trading session and then rebound back to now $299, all in just one single day, is this the volatility set a precedent to what’s about to come? Surprise! Btw I’m just a observer have no vest interests on this brutal manipulation.

[stompix]

Don't get me wrong, there's nothing wrong with shorts. They are an important tool for keeping the market in balance.
But. Shorting 138% of a stock in existence? That's fucked. Selling subprime loans while at the same time shorting them level fucked.

Of course, that wasn't right either, but that was exactly my point.
Two wrongs don't lead to anything other than two more wrongs and in the end, exactly the plebs that you mentioned will be hit. So, who lost those billions, investment funds? Are the investment funds going to grab money from their pockets and pay up, or actually all the money lost is not theirs but also a lot of plebs money in it?

From the outside, it looks like the little guy kicked the but of the evil wall street banksters. In reality, the only ones that lost money are the ones that didn't have a say in all of it, the ones that made the mistake in shorting will still get their hundred thousand bonuses, they will still enjoy their huge salaries and nothing will change. The plebs will scream they have finally got their revenge till they check their pockets.

If this thing triggers more regulation (how do we call this, "good" regulation ? if there is such a thing) to avoid abuses, yes!!!, it will be a victory indeed, if nothing happens it was even less than a pyrrhic victory.

[TedMosby]

Welcome to today's episode of The old Story of Pump and Dump Channel (Stock Market Edition)  
Apparently, it affected the crypto market well. we can see dogecoin get some nice gain today, over 100%.
GameStop really gives the market good vibes, especially for retail investors.
We would see more things like this soon, or strictly something bad will happen after SEC things (surely, SEC will take down those strange market activity).

[HeRetiK]

Of course, that wasn't right either, but that was exactly my point.
Two wrongs don't lead to anything other than two more wrongs and in the end, exactly the plebs that you mentioned will be hit. So, who lost those billions, investment funds? Are the investment funds going to grab money from their pockets and pay up, or actually all the money lost is not theirs but also a lot of plebs money in it?

The general populace being hit how? Because the state will bail out some rando hedge fund that's not even close to system relevant? That would only be the point where they would show their true colors.

So far the only bail out money they've received is from other financial firms, such as Citadel. Those can handle a bit of bleeding. They deserve bleeding. As mentioned above, Citadel is currently actively manipulating the market by preventing Robinhood users from buying $GME, just a week after taking a short position on $GME by investing in Melvin Capital.

So who loses? The Melvin Capital investors? The funds themselves are not even open to the general public. The minimum investment for Melvin Capital is USD 1,000,000,- [1]. I think whoever is invested with them can take a bit of a hit.

[1] https://privatefunddata.com/private-funds/melvin-capital-onshore-lp/

[Gyrsur]

So who loses? The Melvin Capital investors? The funds themselves are not even open to the general public. The minimum investment for Melvin Capital is USD 1,000,000,- [1]. I think whoever is invested with them can take a bit of a hit.

[1] https://privatefunddata.com/private-funds/melvin-capital-onshore-lp/

thanks man for the link!

[The Sceptical Chymist]

That old-school centralized financial structure only came about because there was so much abuse in the stock market in the early 1900s (and earlier).  I can't stand it when a stock exchange halts trading for whatever reason, because to me that's a slap in the face to free markets--but on the other hand, if there were no rules traders would wreak havoc on the market, especially with today's technology.

I haven't been following the GameStop situation, but I heard something about it on Bloomberg.  As far as it relates to bitcoin, I don't think it does. 

One thing I love about crypto is that markets are open 24/7 and right now there really isn't a lot of regulation on exchanges.  But I'd hate to see the stock market go back to the days when pump and dump groups were par for the course (as in the days of Jesse Livermore).  I just wish the stock market was open 24/7 and that trades didn't have to take 3 days to settle....but that's how it is.

[freedomno1]

Market manipulation at it's finest, those Hedge Funds know they have to close their shorts on Friday and are doing the best they can to restrict trading for retail investors
They paid all these firms or are real cozy with the exchanges it's suspect as hell.
I hope they all pay for this and get their funds walloped

Think of this as a response to 2008 and the damage Wall Street caused at the expense of the bagholders and how many lives they messed up.
People are looking for blood.

For Crypto this is probably going to become the Cyprus event for Bitcoin towards DEX
Decentralized Exchanges will replace those cabals and this may just be the match that lights the fuze.

[dothebeats]

And Robinhood was the first one to react with what the retail investors are trying to do. It's ironic at best; Robinhood works for the rich and not actually trying to help the poor lol. But anyway, this is a pump and dump made in the open, and it would not be complete without the SEC slapping the hands of the mischievous traders who started this trend and made millions or even billions of dollars flow into the hands of the unlikely parties. While it's fun to watch the old school stock traders getting wrecked off of their shorts, this still isn't right and it still falls under market manipulation and someone has to face the repercussions of their actions.

It's a great week for the US' stock exchange scene. There's literally never a dull moment on the Land of Opportunities, even if Trump is already out of the frame

[teosanru]

If you are living under the rock, the GameStop (GME) stock trading has been making quite the news recently, because retail investors organized on reddit managed to pump this stock and made some hedge funds suffer tremendous losses on their short positions, to a point when trading had to be halted, and similar events occured with other stocks.

Some people from crypto industry are already making comments how this can be good for crypto, because it's a revolt against old-school centralized finance.

I personally wouldn't hurry with conclusions, as this drama isn't over and we're yet to see any actions from SEC, who already said that they are monitoring the situation.

What do you think?

Haha the Gamestop thing is really the funniest thing I have ever seen in my trading life. More interesting thing is that how tables have turned and retail investors have beaten up the big guns. But coming to cryptos about this. It isn't really a great alternative too. You see shares are just like cryptocurrencies and not like fiat. You cannot create or destroy shares just like that. There can always be a certain number of shares and an increase in supply requires proper approvals which would not affect the current market capitalization.

What happened in Gamestop can happen with any crypto exchange too or might even be already happening. Cryptocurrencies are traceable only until we trade them on decentralized platforms once we create synthetic future contracts out of them which most of the exchanges do these days there is almost no calculation and accountability left to do with cryptocurrencies too. It becomes pretty much like any other derivative. But yes it has raised a lot of questions on the working of these hedge funds and exchanges.

[Silberman]

If you are living under the rock, the GameStop (GME) stock trading has been making quite the news recently, because retail investors organized on reddit managed to pump this stock and made some hedge funds suffer tremendous losses on their short positions, to a point when trading had to be halted, and similar events occured with other stocks.

Some people from crypto industry are already making comments how this can be good for crypto, because it's a revolt against old-school centralized finance.

I personally wouldn't hurry with conclusions, as this drama isn't over and we're yet to see any actions from SEC, who already said that they are monitoring the situation.

What do you think?

Those guys do not know what they are doing, that is illegal and while we see a lot of this in this market that is because you can trade with an anonymous account or use decentralized exchanges and avoid any kind of prosecution, they had to use their real identities when making those trades and the SEC will go after them and make an example out of them, I really do not think they have any idea of what they did, this has shaken the confidence in the markets and the SEC will be very hard on them in order for that confidence to comeback.

[tomahawk9]

Market manipulation at it's finest <...>

heh!
https://twitter.com/CGasparino/status/1354859765491494912

"BREAKING: Regulatory sources say @SEC_Enforcement will be looking at a market manipulation case on @RobinhoodApp - @reddit - $GME imbroglio. They expect SEC to ask for Robinhood's blue sheets trading data, and try to match it up with suspicious comments on Reddit. (1/2)"

also,

"Robinhood hit with class action lawsuit after it restricts GameStop stock" https://finance.yahoo.com/news/robinhood-class-action-lawsuit-gamestop-191704848.html

brb, gonna buy more popcorn cos this about to go wild really fast 

[Broly46]

Yeah you can’t get over with this unnoticed, it’s great to made a film out of this, may be write an entry on the wiki, or take the headlines and slap it on a block chain genesis block, that’s more funny than what CSW can possible created.

[jackg]

So, manipulation is good when is we do it 

The manipulation happened the months before, when hedge funds artificially suppressed the price of $GME by short after short. This is just a way to call them out on it while abiding to the rules they set.

Gme had alright revenue though, they just didn't have a good profit margin. There's a small chance they could bounce back with something, I heard a company in a similar position released more stock and managed to recover from the extra money (or something like that).

The thing of RH closing kinda shows how centralised the exchanges are (especially for small cap stocks like this. One of two international exchanges stopped trading it and the rest just followed (even cross continent).It also didn't seem to be listed in premium exchanger services (ones you pay a fee per trade and a maintenance fee on the account...

Those guys do not know what they are doing, that is illegal and while we see a lot of this in this market that is because you can trade with an anonymous account or use decentralized exchanges and avoid any kind of prosecution, they had to use their real identities when making those trades and the SEC will go after them and make an example out of them, I really do not think they have any idea of what they did, this has shaken the confidence in the markets and the SEC will be very hard on them in order for that confidence to comeback.

They (retail) didn't actually do anything illegal though. Enough people in legal spaces have said as much and how do you know they traded exactly off that reddit post? Like they could've had a volatility alert from another site or seen "top gainers" for a certain period. As long as the original entity didn't not give disclaimers and a disclaimer wasn't given for the board (where either could've been considered necessary) that'd be the only thing considered prosecutionable.

On the other hand, exchanges closing and actively reducing volume would be a reason to sue. As well as there being some volume on there even though most (I can't find one that was open in trading hours) are closed.